Peter Timmer, professor of development studies, emeritus, at Harvard University, is an expert on the world rice market, pro-poor growth, structural transformation, and the supermarket revolution in developing countries. We talked to him about his new book, Food Security and Scarcity: Why Ending Hunger Is So Hard.
Is there a short answer to the question, why is ending hunger so hard?
The short answer is, governments have to do the right thing: the right kind of policy interventions, including interventions in market outcomes, and the right kind of investments providing the right kind of signaling to the private sector. And then you need to recognize that 99.9 percent of the decisions that affect food security are made in markets by private individuals, firms, citizens, traders, and consumers. That tension—between the fact that markets have to do it and the fact that the government has to get the environment right so markets will do the right thing—that turns out to be really tricky.
You talk about the need to combine growth that reaches poor people with a stable food economy. Why is stability so important?
It’s really about stabilizing the food economy so people feel secure. You’re not food secure unless you feel food secure. If the next time you go into the local market you’re afraid that the food won’t be there or that the price will go up, you don’t feel food secure, even though you’re not in any way food insecure. That motivates people to make sure they have extra food in the pantry, it leads to hoarding behavior, it leads to all kinds of risk-averse behavior on the production side. Understanding those behavioral dimensions of food security is critical.
To what extent is food security an income problem?
Once you’ve solved the food availability problem, the access part of food security is clearly an income problem. You need to figure out ways for the poor to become productive so that they can be food secure on their own dime. That’s why inclusive growth is so important. It has to start in agriculture because that’s where the poor and the smallholders are. Basically that involves infrastructure, modern inputs, water control—the whole agricultural revolution. It doesn’t have to be with rice, wheat, or corn, but the more complicated the farming system, the harder it is to figure out a technological base for achieving that agricultural transformation.
In 2008 we had a rice price crisis, and you helped set the stage for popping that price bubble. How did that work?
Tom Slayton [a consultant on rice markets] and I popped that bubble. I was on the West Coast and he was in Washington, and we were going back and forth, getting the US Trade Representative to sign off on letting the Japanese release rice [from their stocks] and then putting pressure on the Japanese to do so. The Japanese didn’t want to do it. They’d have liked to deliberate for a couple of years before doing something as radical as that, but we needed this to be done in a week or two. The day the prime minister said Japan was going to sell 300,000 tons of rice to the Philippines, the price fell 30 percent in Bangkok. It fell another 30 percent the next day, half what it had been the week before. The minute the bubble burst, everybody realized they should start getting rid of expensive rice stocks or at least stop buying. And of course once the bubble burst, it’s obvious that it’s a bubble.
The other thing is, the countries learned: Let’s be more careful. When the price of corn went up in 2010 and 2012, the price of rice didn’t budge. Being careful meant quietly building up government stocks, so when the typhoon hit in the Philippines, for example, they didn’t panic.
How should we be managing other kinds of grain stocks?
If I were the United States, I’d be building up some wheat stocks. But that’s not going to happen. I think the probability of another bad drought is high. We’re on a knife edge. You slip on the surplus side of the knife edge, prices go way down. You slip on the deficit side, prices go way up. We’ve got incredible volatility out there. The only way to solve that is going to be through larger grain stocks. It’s a bigger insurance policy.
You argue that behavioral economists offer better insights into policymakers’ behavior during a food security challenge. Why is that?
Sometimes it seems like policymakers are just crazy, but they often understand better than economists how consumers and farmers form expectations about the food market. Once a panic hits, the only way to fix it is with real supplies in the market. Sleight of hand won’t work.
Managing food price stability is a lot like driving a supertanker. You steer from behind and make sure you know where you’re going in the long run, and you make sure you’ve plotted every turn to get there. And then when things happen, you can be on top of it.
For more information on this topic:
- Learn more about the book Food Security and Scarcity.